THE COMMISSIONER FOR INLAND REVENUE V OREWA HEALTHCARE CENTRE(2003) LIMITED (IN LIQUIDATION) HC AK CIV 2007-404-001594

THE COMMISSIONER FOR INLAND REVENUE V OREWA HEALTHCARE CENTRE(2003) LIMITED (IN LIQUIDATION) HC AK CIV 2007-404-001594 2 August 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-001594BETWEEN THE COMMISSIONER FOR INLAND REVENUE Plaintiff AND OREWA HEALTHCARE CENTRE(2003) LIMITED (IN LIQUIDATION) Defendant Hearing: 2 August 2007 Appearances: P E Macredie for Plaintiff S O McAnally for Liquidators (G Rea and P Sargison) Judgment: 2 August 2007ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUESolicitors: Mr P E Macredie, Inland Revenue, Auckland North Service Centre, P O Box 33-150, Takapuna Mr S O McAnally, Keegan Alexander, Solicitors, Auckland[1] This proceeding was called before me 5 July when the Commissioner sought the appointment of a liquidator and the placing of the defendant in liquidation. An issue arose as to whether a liquidator/s had already been validly appointed. Counsel who then appeared for the Commissioner told me that the company had purported to pass a resolution placing the company in liquidation on 2 July 2007 at 11:00 a.m. The Commissioner had obtained a copy of the resolution of the consent filed by the liquidators. Counsel drew my attention to the fact that the shareholders' special resolution stated that it was dated "2 nd day of July 2007 Time: 11:00 a.m." and that the consent of the liquidator included the following statement:Dated the 2 nd day of July 2007 at 11:00 a.m.[2] Counsel considered that the consent was invalid because it did not comply with s 282 of the Companies Act 1993. That section provides:282 Consent to appointmentThe appointment of a person, other than an Official Assignee, as liquidator is of no effect unless that person has consented in writing to the appointment.[3] The submission was made that the consent must have been signed prior to the purported passing of the resolution. [4] On 5 July I told counsel that on the material before me no firm conclusion could be come to either way. If both documents were signed at "11:00 a.m." then it is possible that the consent came first and the resolution second, or that the sequence was reversed. [5] I directed the liquidators to report to me, and Mr McAnally has appeared as counsel and an affidavit has been filed. There have been further submissions made to me today, this time by Mr Macredie for the Commissioner as well as Mr McAnally. The definition of the problem seems to have altered somewhat since the first exchanges that I had with counsel. It would seem that the Commissioner now takes the view that what is significant is that the present consent was a "conditional" consent. It is therefore necessary to say something more about the facts of the case.[6] The only affidavit filed is Mr Sargison's affidavit 24 July 2007. That affidavit discloses that Mr Sargison and Mr Rea were contemplating accepting appointment as liquidators of the defendant in May 2007. Mr Rea was going to be leaving for overseas. He signed a consent to act as liquidator and left it with Mr Sargison. Mr Rea signed the consent on 31 May. [7] Mr Sargison made some inquiries about the nature of the defendant's business. It was a rest home facility. This raised anxiety on the part of the intending liquidators as to what would happen to the stream of funding from the Waitakere District Health Board which the institution owned by the defendant had been receiving. That needed to be resolved before the liquidators would accept appointment. Mr Sargison made inquiries and was satisfied concerning the matter of the funding. He then signed the consent on 26 June 2007. His affidavit is unclear as to what happened to the consent at that point, but his affidavit is clear that that was the date by which the consent was finally signed by both intending liquidators. [8] On 2 July 2007 at 11:00 a.m. the company passed a shareholders' resolution. On that day the shareholders of the defendant faxed to Mr Sargison a copy of the resolution which the company had passed that day at 11:00 a.m. Mr Sargison thought it would be appropriate if he was to add to the consent to act which he and Mr Rea had signed the date and time which I have mentioned above. So he wrote onto the consent which he and Mr Rea had previously signed, the date and time of 2 July at 11:00 a.m. [9] The consent seems to me to be compliant with s 282 of the Act. That section simply requires a consent in writing. That is what was in existence at the time when the shareholders passed their resolution. Mr Macredie says that the consent was conditional. I am unable to read it that way. I accept that the liquidators were undecided about whether the consent which Mr Rea had signed would be sent on after signature by Mr Sargison. At least in an initial period after Mr Rea had signed it the liquidators wanted to consider their position but by the time that the resolution had been passed the liquidators had made their minds up, both of them had signed the consent, and a consent for the purposes of s 282 was in existence. It does not, on its face, state any conditions at all.[10] Mr McAnally mentioned to me an additional point which was that there is no requirement that a consent under s 282 be dated and timed. That may have some significance in the present context. Given that there is no requirement that the consent bear a date and time it must always be open to the liquidators or other interested parties to prove by other evidence when the consent was actually given. In my view the consent actually is given when it is signed by the necessary parties. On that footing, the liquidators in this case have proved that they gave their consent on 26 June. The consent was a valid one. It did not state for example that the two men "might" consider appointment as liquidators or anything of that kind. It did not contain conditions which stated that their consent was not to take effect until some other event had occurred. It is in all respects unconditional, and I do not accept that the Commissioner's concerns are founded. [11] In my view, the only objection that the Commissioner has raised to the appointment of Messrs Sargison and Rea is without foundation. There is no other ground for attacking their appointment as liquidators, and I accordingly conclude that the company was placed in liquidation from 2 July 2007, which is some three days before the matter was first called before me. [12] So far as costs are concerned, I deal first of all with the Commissioner's costs on issuing the proceeding. The Commissioner did so in ignorance of the fact that a resolution had been passed. It seems to me appropriate that the Commissioner have costs for commencing proceedings and costs for the appearance on the first calling of this matter 5 July 2007. [13] The next issue is who should pay the costs for today's hearing. Mr McAnally sought an order for costs against the Commissioner. [14] I accept that the liquidators were duty-bound to report to the Court, given that they did so pursuant to a direction. On the other hand, the problems that arose in this case arose from the fact that Mr Sargison thought it necessary to endorse on the consent a date which was not in fact the correct date in the sense that it was not the date when the document was actually signed. I do not suggest that there is any misconduct on his part, but I simply record that his actions in doing so brought onhis own head the necessity for a further inquiry to be conducted by the Court, and in those circumstances I do not believe it is reasonable to require the Commissioner to pay the liquidators' costs. _________________________ Associate Judge J Doogue